Off Topic: Article “The great oil bubble has burst”

[Arraya]

John, your ever morphing opinion on oil is very telling. You start with the speculation argument then you move to, it’s the democrats fault., then you laughably trot out shale oil. Now that oil is going down you are back to speculation. Now is speculation your final answer?

No doubt that speculation acts as an amplification of the trend, there is also war premium and currency valuation plays a role, but fundamentals is still the driver.

The simple fact remains that we are on a four year plateau and many old fields declining fast and new projects will not offset old declines in the very near future. There is a nice group of professions called ASPO (association study of peak oil) take the time out of their lives and do the math for free because they think it is a huge issue. The ASPO spawned theoildrum.com another group of professionals, may with Phds, that tackle the issue from many angles also in their free time. And it is an enormous issue that touches all aspects of modern civilization and requires technical people from many different disciplines to help understand the full implications. There is also a college in northern california called the post carbon institute that’ main focus is fossil fuel depletion.

This downturn was to be expected by any astute watcher of oil.

-Production his holding steady, actually and uptick in OPEC – SA, Angola and Kuwait are up about 600K between the three of them.
-Demand is precipitously falling in the west, the US is down like 500K bbl per day from last year and failing quickly. The EU is doing the same
-Threat of War with Iran is down
-The dollar is up
-And all projections are for much lower demand because of the economy.

Given all the above variables factored in with the elasticity of oil, it’s doing about what it is supposed to.

Actually, I have a post from back in January here where I predicted volatile prices trading between $80 and $150 here on this site for 2008. Basically if you study the big picture economy (falling) and production forecasts by reliable sources (stable) this was expected. The fall in oil is more an indicator of our economy than anything else.

Let’s focus on the big picture for a moment.

The fact remains we are still on the plateau that can’t be surpassed but by maybe a tiny fraction and of what it is and will start declining, forever, at most in 5 years depending on the severity of the recession/depression we are going into.

As prices continue to go down, which I am fairly sure it should due to the state of the economy and the projected stability of production, it turns off signals for market solutions to the problem. Once we go sub $80, forget it, the market won’t tell us again until it’s too late.

These high prices should be a warning to everybody of what can happen when we bump up against limits and if we do not have a massive transition to alternatives starting yesterday there will be mucho problemos in the very near future. If terminal decline started today @ 4-8% yearly we mine as well hit reset on the global economy because it would not function with in two years at most.

Now you can link all these articles that give people a false sense of security but IMO they obfuscate the real problem and feed into peoples denial of the fact that everything has to change or nature will change it for us in an unpleasant way.

The physical reality of peak oil is not really a problem. It’s everybody’s response to it. Which, by in large, has been denial as so evident by this thread.

Here is a excellent documentary, Crude Awakening, for a started course on peak oil if anybody is interested.

http://video.google.com/videosearch?hl=en&client=safari&rls=en&resnum=0&q=crude+awakening&oe=UTF-8&um=1&ie=UTF-8&sa=N&tab=wv&oi=property_suggestions&resnum=0&ct=property-revision&cd=2#

Now a closing word from retired geologist Colin Campbell (Texaco, BP, Amoco):

“Throughout history, people have had difficulty in distinguishing reality from illusion. Reality is what happens, whereas illusion is what we would like to happen. Wishful thinking is a well-worn expression. Momentum is still another element: we tend to assume that things keep moving in the same direction.

The world now faces a discontinuity of historic proportions, as nature shows her hand by imposing a new energy reality. There are vested interests on all sides hoping somehow to evade the iron grip of oil depletion, or at least to put it off until after the next election or until they can develop some strategy for their personal or corporate survival. As the moment of truth approaches, so does the heat, the deceptions, the half-truth and the flat out lies.”

[Eugene]

The “horrible, horrible” remark was made sarcastically

Not entirely sarcastically – I do have a lot of money in euros, francs and australian dollars, and all these investments all tanking. AUD is down 3% since I got in, the rest is still in the green, but I’m looking at much smaller gains now.

Of course it could have been much worse, I could have invested in S&P, or even emerging markets. GBRCX is down 27% since I got out. It may be time to start looking for an entry point.

Long term, these developments in oil prices will allow the Fed to drop rates even further, and the economy is still weak enough that the Fed would do that if inflation allows them. So, I think it’s a fluctuation rather than a long-term trend.

[Eugene]

The “horrible, horrible” remark was made sarcastically

Not entirely sarcastically – I do have a lot of money in euros, francs and australian dollars, and all these investments all tanking. AUD is down 3% since I got in, the rest is still in the green, but I’m looking at much smaller gains now.

Of course it could have been much worse, I could have invested in S&P, or even emerging markets. GBRCX is down 27% since I got out. It may be time to start looking for an entry point.

Long term, these developments in oil prices will allow the Fed to drop rates even further, and the economy is still weak enough that the Fed would do that if inflation allows them. So, I think it’s a fluctuation rather than a long-term trend.

[Eugene]

The “horrible, horrible” remark was made sarcastically

Not entirely sarcastically – I do have a lot of money in euros, francs and australian dollars, and all these investments all tanking. AUD is down 3% since I got in, the rest is still in the green, but I’m looking at much smaller gains now.

Of course it could have been much worse, I could have invested in S&P, or even emerging markets. GBRCX is down 27% since I got out. It may be time to start looking for an entry point.

Long term, these developments in oil prices will allow the Fed to drop rates even further, and the economy is still weak enough that the Fed would do that if inflation allows them. So, I think it’s a fluctuation rather than a long-term trend.

[Eugene]

The “horrible, horrible” remark was made sarcastically

Not entirely sarcastically – I do have a lot of money in euros, francs and australian dollars, and all these investments all tanking. AUD is down 3% since I got in, the rest is still in the green, but I’m looking at much smaller gains now.

Of course it could have been much worse, I could have invested in S&P, or even emerging markets. GBRCX is down 27% since I got out. It may be time to start looking for an entry point.

Long term, these developments in oil prices will allow the Fed to drop rates even further, and the economy is still weak enough that the Fed would do that if inflation allows them. So, I think it’s a fluctuation rather than a long-term trend.

[Eugene]

The “horrible, horrible” remark was made sarcastically

Not entirely sarcastically – I do have a lot of money in euros, francs and australian dollars, and all these investments all tanking. AUD is down 3% since I got in, the rest is still in the green, but I’m looking at much smaller gains now.

Of course it could have been much worse, I could have invested in S&P, or even emerging markets. GBRCX is down 27% since I got out. It may be time to start looking for an entry point.

Long term, these developments in oil prices will allow the Fed to drop rates even further, and the economy is still weak enough that the Fed would do that if inflation allows them. So, I think it’s a fluctuation rather than a long-term trend.

[jficquette]

Arraya,

I posted that article on Oil simply to show it to the group for information only.

I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.

John

[jficquette]

Arraya,

I posted that article on Oil simply to show it to the group for information only.

I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.

John

[jficquette]

Arraya,

I posted that article on Oil simply to show it to the group for information only.

I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.

John

[jficquette]

Arraya,

I posted that article on Oil simply to show it to the group for information only.

I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.

John

[jficquette]

Arraya,

I posted that article on Oil simply to show it to the group for information only.

I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.

John

[svelte]

[quote=jficquette]Arraya,
I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.
[/quote]

For once you and I agree on something, John.

I don’t how anybody could watch the events this year – especially the last few weeks – and not come to that conclusion.

Though I may be totally off base here, I have two theories on why speculation may have run rampant:
1) Investors were trying to figure out where to stash their money – housing looks bad, stock market looks bad, gotta put it somewhere! Why not oil?

2) I wouldn’t put it past some of the other countries who are very unhappy with the current US political climate to try and influence the upcoming election by artificially increasing the price of oil through speculation to attempt to tilt the field toward the Dems. I have absolutely zero proof – just a hunch.

I usually don’t go for conspiracy theories but I’m making an exception in this case. 🙂

[svelte]

[quote=jficquette]Arraya,
I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.
[/quote]

For once you and I agree on something, John.

I don’t how anybody could watch the events this year – especially the last few weeks – and not come to that conclusion.

Though I may be totally off base here, I have two theories on why speculation may have run rampant:
1) Investors were trying to figure out where to stash their money – housing looks bad, stock market looks bad, gotta put it somewhere! Why not oil?

2) I wouldn’t put it past some of the other countries who are very unhappy with the current US political climate to try and influence the upcoming election by artificially increasing the price of oil through speculation to attempt to tilt the field toward the Dems. I have absolutely zero proof – just a hunch.

I usually don’t go for conspiracy theories but I’m making an exception in this case. 🙂

[svelte]

[quote=jficquette]Arraya,
I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.
[/quote]

For once you and I agree on something, John.

I don’t how anybody could watch the events this year – especially the last few weeks – and not come to that conclusion.

Though I may be totally off base here, I have two theories on why speculation may have run rampant:
1) Investors were trying to figure out where to stash their money – housing looks bad, stock market looks bad, gotta put it somewhere! Why not oil?

2) I wouldn’t put it past some of the other countries who are very unhappy with the current US political climate to try and influence the upcoming election by artificially increasing the price of oil through speculation to attempt to tilt the field toward the Dems. I have absolutely zero proof – just a hunch.

I usually don’t go for conspiracy theories but I’m making an exception in this case. 🙂

[svelte]

[quote=jficquette]Arraya,
I still feel speculation/manipilation was the main driver that pushed oil up to 147 or so.
[/quote]

For once you and I agree on something, John.

I don’t how anybody could watch the events this year – especially the last few weeks – and not come to that conclusion.

Though I may be totally off base here, I have two theories on why speculation may have run rampant:
1) Investors were trying to figure out where to stash their money – housing looks bad, stock market looks bad, gotta put it somewhere! Why not oil?

2) I wouldn’t put it past some of the other countries who are very unhappy with the current US political climate to try and influence the upcoming election by artificially increasing the price of oil through speculation to attempt to tilt the field toward the Dems. I have absolutely zero proof – just a hunch.

I usually don’t go for conspiracy theories but I’m making an exception in this case. 🙂

[Author]

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